2010 (9) TMI 303 - AT - Central Excise

Cenvat credit - cenvat credit on MS shapes, PMP Plates, MS Channels and MS Plates SCN issued on the ground that items cannot be considered as capital goods and seeking to deny credit and also proposing imposition of penalty Held that - remand the matter to the original authority for considering the issue afresh in the light of the decision of the Tribunal in the case of Vandana Global cited supra - appellants directed to adduce necessary evidence indicating the actual use of the materials

Summary

Issues:
1. Denial of Cenvat credit on certain goods used in fabrication.
2. Interpretation of capital goods eligibility.
3. Application of previous judgments on similar cases.
4. Proper consideration of specific use of items in dispute.

Analysis:
1. The appeal challenged the Commissioner (Appeals) order confirming duty demand, interest, and penalty imposed under Rule 15 of Cenvat Credit Rules, 2004. The dispute arose from the denial of Cenvat credit on MS shapes, PMP Plates, MS Channels, and MS Plates used by the appellants in fabrication during September to October 2005.

2. The appellants argued that the goods were used for repair and maintenance of sugar mill/plant, making them eligible for credit as parts and components of capital goods. They cited precedents such as Union of India v. Hindustan Zinc Ltd. and CCE, Salem v. India Cements Ltd. The Hon'ble Supreme Court's decision in CCE, Jaipur v. Rajasthan Spinning & Weaving Mills Ltd. supported their claim that steel plates and MS channels used for fabrication of chimneys qualify for Cenvat credit.

3. The Department contended that certain items were used in support structures, making them ineligible for credit as per the Vandana Global Ltd. case. The Tribunal differentiated the facts of Rajasthan Spinning & Weaving Mills from the present case, emphasizing the importance of specific use in determining Cenvat credit eligibility.

4. The Tribunal observed that the Commissioner (Appeals) did not adequately consider the specific use of each item, leading to an improper decision based on previous judgments. Given the Tribunal's decision in Vandana Global Ltd. rendered after the lower authorities' orders, the case was remanded to the original authority for a fresh assessment based on the actual use of materials, with the appellants instructed to provide necessary evidence.

In conclusion, the appeal was allowed by way of remand, emphasizing the importance of considering the actual use of goods in determining Cenvat credit eligibility, as per relevant legal precedents and the inclusive definition of capital goods.